Business

Port strike averted after partial deal with labor union

By Steven Greenhouse New York Times

Posted:
12/28/2012 05:36:27 PM PST

Updated:
12/28/2012 07:35:35 PM PST

Dockworkers dropped their threat of an imminent strike against ports from Boston to Houston after their union and shipping companies reached a deal on the main point of their dispute, a federal mediator announced Friday.

The mediator said the two sides had agreed to extend the existing contract by 30 days, to Jan. 28, to give them time to try to reach an agreement on the remaining issues, including what the companies say are antiquated work rules. Late Friday, the two sides issued a new announcement, saying they had agreed to extend the contract an additional week, to Feb. 6, creating a new potential strike deadline.

The partial agreement means that the union, the International Longshoremen's Association, will not carry through on its threat to have 14,500 dockworkers go on strike Sunday at 14 ports along the East and Gulf Coasts.

In a statement Friday, George H. Cohen, director of the Federal Mediation and Conciliation Service, said the two sides had reached an agreement in principle on a particularly contentious issue, known as "container royalty payments."

The shipping companies share those payments with union members for each ton of cargo handled. The union had for months denounced the companies' proposal to freeze those payments for current longshoremen and eliminate them for future employees. No details about the agreement were disclosed.

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"What I can report is that the agreement on this important subject represents a major positive step toward achieving an overall collective bargaining agreement," Cohen said. "While some significant issues remain, I am cautiously optimistic that they can be resolved in the 30-day extension period."

After the talks broke off on Dec. 18, Cohen persuaded the two sides to return this week for a last-minute round of bargaining. They have been negotiating on and off since March.

The U.S. Maritime Alliance, a group of shipping companies and terminal owners, said it paid $211 million in container royalties to the dock workers last year, averaging $15,500 for each eligible union member.

James A. Capo, the alliance's chairman, said the royalty payments amounted to $10 an hour on top of what he said were already generous wages.

"This issue seems to have dwarfed anything else," Capo said in an interview this week.

But in the days before the strike deadline, Harold J. Daggett, the union's president, said, "We have repeatedly asked them to leave this item alone."

The maritime alliance, known as USMX, said the longshoremen earned $124,000 a year on average in wages and benefits, including the royalty payments. Union officials said those figures were exaggerated and put average annual wages at $75,000 before benefits, for what they described as dangerous jobs moving heavy cargo. Under the current contract, most longshoremen earn $32 an hour.

The container payments were created in the 1960s to compensate the longshoremen because many were losing their jobs as seaports embraced automation and the use of standardized, 40-foot-long containers to ship goods. Largely as a result of those trends, the number of longshoremen employed in the Port of New York and New Jersey, the busiest East Coast port, has dropped to 3,500 from 35,000 in the 1960s.

The shipping companies view the royalty payments as a relic of decades past, intended for longshoremen who worked in the 1960s and 1970s. But the union still sees the payments as a core part of wages and as an important way to share productivity gains with members. The payments come to $4.85 a ton, the union said.

As the strike deadline approached, Daggett said, "USMX seems intent on gutting a provision of our master contract that ILA members fought and sacrificed for years to achieve."

Representatives of the maritime alliance and shipping companies declined to discuss the agreement on the royalty payments or other aspects of the talks, saying that Cohen had urged the two sides not to talk to the news media.

Matthew Shay, president of the National Retail Federation, applauded the announcement but said a contract extension did not provide the level of certainty that retailers and other industries were looking for to ensure their goods would continue to pass through the ports.

"We welcome today's news that a contract extension has been reached," he said in a statement. "However, we continue to urge both parties to remain at the negotiating table until a long-term contract agreement is finalized."

Shay's federation and more than 100 other business groups wrote to President Barack Obama last week urging him to invoke his emergency powers under the 1947 Taft-Hartley Act to prevent a strike. Labor experts said Obama would have been caught between fears that a strike would damage the already-weak economy and worries that blocking it would anger allies in the labor movement.

In addition to reaching a master contract for the 14 ports, the two sides need to negotiate individual agreements for the ports, many of which involve work rules that the shipping companies are eager to change, calling them inefficient and costly.